If you sell your main residence then there is no capital gains to pay when you sell. So he'd have to live there for a period to make it his main residence before selling it. And then switch to living in the other house. I believe the rules say you have to live in it for 2 out of the 5 years before the sale to avoid CGT. And you're only exempt if the profit is £250k for an individual anyway (double for a couple).
Personally, if you own a second home for rental purposes then you should have to pay the CGT and be unable to avoid it. It's an investment in a house after all to make money.... and thinking about it the CGT problem could be a lot bigger because it will be paid on the price difference from when it was bought and when it was sold. The OP's house was probably bought a while ago because the mortgage is paid off. So the CGT amount could be substantial if the house isn't sold for a number of years.
Last edited by: rtj70 on Fri 10 Jun 11 at 12:18
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